Again this year, August attracted a great deal of interest from analysts, economists and investors. The Fed conference was back on the agenda. At previous editions, the central bankers made statements that had far-reaching and long-lasting consequences for the financial markets.
This year there were fewer fireworks, but that did not make the meeting any less important. The speech by Jerome Powell, the chairman of the Fed, shows that there is a good chance that the Fed will raise official interest rates in the United States less often next year.
This is partly the result of the pressure that US President Donald Trump is putting on the central bank so as not to make borrowing money much more expensive. However, he also suppresses this because there is a good chance that economic growth (which was 4,2% in the second quarter) will decline. A series of interest rate increases could only make matters worse.
Markets react
We saw an immediate reaction on the financial markets. The euro-dollar exchange rate stopped its decline and went from 1,23 to 1,14. The price rebounded slightly, towards 1,17. The American one 10 year old interest rates also fell and moved further from the psychologically important level of 3%. In addition, the German 10-year interest rate is below 0,4%.
The prospect of stopping the purchase of government bonds means that it would not be surprising if interest rates rose significantly on balance in the coming quarters and thus caught up (compared to their American counterparts).
This article is part of the Arable Farming Pro Trend Report published this week, which also focuses on the potato market, the manure market and the onion market. Click here to read the Trend Report.